While Canadians are used to paying taxes for goods and services, they might be surprised to learn that over 50 per cent of the sticker price on a bottle of alcohol comes from government taxes.

Understanding Canada’s alcohol taxation system is complex, as it involves multiple layers of taxation from the federal excise duty, which is levied at the point of production or import and becomes part of the wholesale cost of a product. Then there is the provincial markup rate, which varies widely from province to province.

On top of these taxes are the buyer’s sales taxes. Products with higher alcohol percentages, such as spirits and refreshment beverages, are generally taxed at a higher rate than products with lower alcohol percentages, such as beer and wine.

Both Alberta and Saskatchewan have moved to fully privatize their liquor stores, whereas other provinces still maintain government-controlled liquor stores. These government monopolies charge higher markup rates, resulting in higher retail prices for consumers. Canada’s heavy tax system and bureaucratic hurdles have pushed many alcohol brands to the brink of survival; some have introduced lower-alcohol options, while others have adapted by selling outside of the country.

Stifling craft industry growth

In British Columbia, 2025 saw 20 breweries close due to softening demand, rising costs and over-taxation. Ken Malenstyn, one of the owners of Barnside Brewing in Ladner, B.C., says the provincial markup rates are the cause of “killing B.C. craft breweries.” Malenstyn says that if the markup model were fair, craft breweries would be able to pay their employees and invest in growing their businesses by expanding distribution and setting more competitive prices. “All these things would help make craft breweries more sustainable, and to continue generating revenue for the government and hiring more employees,” said Malenstyn.

Even long-established breweries, such as Lighthouse Brewing, which operated for 27 years, have had to close permanently. “There’s something wrong when that’s happening. So, it’s not just the small guys … there’s just a lot of good operators that aren’t able to survive because they’re constantly having to put their own money back in the brewery to keep it going,” said Malenstyn.

In summer 2025, the BC Craft Brewers Guild pitched reforms, titled Protect BC Craft Beer, to reduce the tax burden on small, local producers. “For most small breweries, we’re paying 40 cents a litre for every litre we produce before we sell anything, and that’s just for the right to be in the industry,” Malenstyn said. “And for a lot of us, it could be 10 per cent of our revenue.” The Guild told Victoria News that these reforms would be revenue-neutral for the government and help save B.C. craft breweries approximately $16.3 million annually.

Classification disputes

A few years prior to launching Edna’s Non-Alcoholic Cocktails, Nick Devine envisioned a brand of alcoholic beer-based cocktails. Devine had 20 pallets worth of these canned beer cocktails manufactured by a local Vancouver brewery. At the time, the British Columbia Liquor Distribution Board (BCLDB) disagreed with Devine’s classification of the product as a beer. Beer markups are based on production volume, and for small producers producing 15,000 hectolitres or less, the markup would be 40 cents per litre. The BCLDB wanted to classify Devine’s product as a refreshment beverage, which would have significantly increased the markup rate to 73 per cent per litre.

The dispute dragged on for months before Devine was permitted to sell the inventory he had already produced. By then, the project had become a financial loss for Devine and left him feeling demoralized. Armed with the lessons he had learned from his beer-based cocktail venture, Devine later left the alcohol space and went on to launch a successful line of non-alcoholic cocktails. His experience with the BCLDB underscores how challenging it can be for new, unconventional products to navigate a system built around the long-established product classifications of the liquor distribution board.

Evolving into the low alcohol market

Olivia Lovenmark-Hay launched Duchess Cocktails in 2020 with a 12 per cent ABV bottled cosmopolitan. “With tax being 55 per cent of our shelf price, it is a significant aspect when it comes to pricing. It really makes creating a premium product or a higher quality product much more challenging because the cost of what you are selling goes up so significantly,” said Lovenmark-Hay. She is now preparing to launch a low alcohol line of canned ready-to-drink spritzes.

It really makes creating a premium product or a higher quality product much more challenging because the cost of what you are selling goes up so significantly.

Olivia Lovenmark-Hay, Duchess Cocktails

Lovenmark-Hay says that her 12 per cent ABV cocktails were “much better to sip at home … but by offering something that’s lower ABV at five per cent, [we’re] really expanding the use cases and the people who are more interested in [our] product.”

Another benefit of producing a series of lower per cent ABV drinks is the considerably lower federal excise duty. As of April 1, 2026, spirits containing not more than seven per cent absolute ethyl ABV have an excise duty of $0.358 per litre, whereas spirits containing more than seven per cent absolute ABV are $14.117 per litre. Duchess Cocktails will be able to offer their spritzes at a more cost-friendly price point for potential customers. The stark difference in excise duty rates for products below and above seven per cent ABV also underpins how these arbitrary rules dictate the types of products presented to customers in stores.

Diversifying into other markets

Nathan Flim, founder of The Fort Distillery in Alberta, has expanded his business into several U.S. states and Taiwan. Remarkably, Flim found it more difficult to get his products into other Canadian provinces’ government-run liquor stores than into the U.S. For Film, the extensive paperwork and application process for each liquor distribution board was challenging, and the small market size in some provinces made the hassle of applying not worth it. He made more revenue selling his products in the U.S. than selling to provinces such as B.C. or Ontario, where alcohol taxation is heaviest.

Dalia Kohen, the founder of Wildfolk, a brand of non-alcoholic botanical cocktails, also began expanding into the U.S. The initial process was smooth, but after Aug. 29, 2025, when the U.S. implemented tariffs that removed the “de minimis” exemption allowing shipments valued at $800 USD or less to enter the country duty-free, Kohen began having many of her shipments returned. She found that even with the correct paperwork, her products would still be sent back, often damaged and no longer in sellable condition. Kohen has since focused her efforts on growing in B.C. and Alberta.

Helping the little guy

At the Stratford-Fox Run Distillery in Ottawa, master distiller Adam Brierley says that in Ontario, the federal excise tax is indexed annually to the Consumer Price Index. Through government intervention, the tax is currently capped at two per cent per year. “Every April 1st, it becomes something that distilleries have to consider. Do we want to eat that as part of our cost of goods … or do we increase every year by the two per cent component of the excise tax year over year over year?” said Brierley.

Stratford-Fox Run Distillery has generally chosen to absorb the increase each year to avoid the perception that they are changing their prices on a whim. “Our whisky, for example, has been available for $44.95 for the last three years,” said Brierley.

On top of the federal excise duty is Ontario’s provincial markup rate of 61.5 per cent. Then there are the environmental fees, a volume levy and a 13 per cent Harmonized Sales Tax. “We all need to pay tax in one way or another in order to fund all the services that we enjoy,” Brierley admitted, but he says he would like to see the government offer more tax incentives to support smaller, local producers.

“I think if you ask any distiller in Ontario, we are all very envious of what the distillers in B.C. enjoy from their governments,” he said.

In B.C., spirit producers that use 100 per cent B.C. agricultural ingredients and maintain a production level under 100,000 litres per year can qualify as “craft distillers.” This designation allows them to avoid the standard BCLDB wholesale markup. In Ontario, there is no exemption for the use of Ontario-grown ingredients. “We get taxed the same as the big guys, whereas the cost of labour and cost of goods is going to be a lot higher in comparison,” said Brierley.

The economies of scale clearly favour larger producers, so Brierley would like to see the Ontario government implement a program similar to B.C.’s to give smaller players, such as himself, a chance to compete.

Traduit par Audrey Lemire

Les Canadiens sont habitués à payer des taxes sur les biens et services, mais ils pourraient être étonnés d’apprendre que plus de 50% du prix affiché sur une bouteille d’alcool provient des taxes gouvernementales.

Comprendre le système de taxation de l’alcool au Canada est un véritable casse-tête, car il implique plusieurs niveaux de taxation. Tout commence par le droit d’accise fédéral, qui est appliqué au moment de la production ou de l’importation et qui fait partie intégrante du coût de gros d’un produit. Ensuite, il y a le taux de majoration provincial, qui peut varier considérablement d’une province à l’autre.

À cela s’ajoutent les taxes de vente que paient les consommateurs. Les produits ayant un pourcentage d’alcool plus élevé, comme les spiritueux et les boissons rafraîchissantes, sont généralement soumis à un taux de taxation plus élevé que ceux ayant un pourcentage d’alcool plus faible, comme la bière et le vin.

L’Alberta et la Saskatchewan ont décidé de privatiser entièrement leurs magasins de vin, tandis que d’autres provinces continuent de gérer des magasins de vin contrôlés par l’État. Ces monopoles gouvernementaux appliquent des taux de majoration plus élevés, ce qui se traduit par des prix de détail plus élevés pour les consommateurs.

Le système fiscal complexe du Canada et les obstacles bureaucratiques ont poussé de nombreuses marques d’alcool au bord de la survie. Certaines ont dû introduire des options à faible teneur en alcool, tandis que d’autres ont choisi de se tourner vers des marchés étrangers.

Étouffer la croissance de l’industrie artisanale

En Colombie-Britannique, 2025 a été marquée par la fermeture de 20 brasseries en raison d’une demande en baisse, de l’augmentation des coûts et d’une taxation excessive. Ken Malenstyn, l’un des propriétaires de Barnside Brewing à Ladner, en C.-B., soutient que les taux de majoration provinciaux sont responsables de la destruction des brasseries artisanales de la C.-B.

Malenstyn explique qu’avec un modèle de majoration équitable, les brasseries artisanales pourraient mieux rémunérer leurs employés et investir dans la croissance de leurs activités en élargissant leur distribution et en fixant des prix plus compétitifs. « Toutes ces mesures contribueraient à rendre les brasseries artisanales plus durables et à continuer de générer des revenus pour le gouvernement tout en créant de nouveaux emplois », a-t-il déclaré.

Même des brasseries bien établies, comme Lighthouse Brewing, qui a fonctionné pendant 27 ans, ont dû fermer leurs portes de façon définitive. « Il y a quelque chose de profondément troublant lorsque cela se produit. Ce ne sont pas seulement les petits acteurs qui sont touchés. De nombreux bons opérateurs peinent à survivre parce qu’ils doivent constamment réinjecter leurs propres fonds dans la brasserie pour la maintenir à flot », a ajouté Malenstyn.

À l’été 2025, la BC Craft Brewers Guild a proposé des réformes, intitulées Protect BC Craft Beer, visant à alléger le fardeau fiscal pesant sur les petits producteurs locaux. « Pour la plupart des petites brasseries, nous payons 40 cents par litre pour chaque litre produit avant de vendre quoi que ce soit, et cela ne couvre même pas le droit d’exercer notre activité », a précisé Malenstyn. « Pour beaucoup d’entre nous, cela représente jusqu’à 10% de nos revenus. »

La Guilde a informé Victoria News que ces réformes seraient neutres sur le plan des revenus pour le gouvernement et permettraient d’économiser environ 16,3 millions de dollars par an pour les brasseries artisanales de la C.-B.

Litiges de classification

Quelques années avant de lancer les cocktails non alcoolisés Edna, Nick Devine avait imaginé une marque de cocktails à base de bière alcoolisée. Devine avait fait fabriquer 20 palettes de ces cocktails en conserve par une brasserie locale de Vancouver.

À l’époque, la British Columbia Liquor Distribution Board (BCLDB) n’était pas d’accord avec la classification de Devine qui considérait son produit comme une bière. Les majorations sur la bière sont basées sur le volume de production, et pour les petits producteurs produisant 15 000 hectolitres ou moins, la majoration est de 40 cents par litre. La BCLDB souhaitait classer le produit de Devine comme une boisson rafraîchissante, ce qui aurait considérablement augmenté le taux de majoration à 73% par litre.

Le litige a duré des mois avant que Devine ne soit enfin autorisé à vendre l’inventaire qu’il avait déjà produit. Entre-temps, le projet était devenu une perte financière pour lui, le laissant démoralisé. Fort des leçons tirées de cette expérience, Devine a finalement quitté le secteur de l’alcool pour lancer une ligne réussie de cocktails non alcoolisés.

Son expérience avec la BCLDB met en lumière les défis auxquels font face les nouveaux produits non conventionnels dans un système qui repose sur des classifications de produits bien établies.

Évolution vers le marché des boissons à faible alcool

Olivia Lovenmark-Hay a lancé Duchess Cocktails en 2020 avec un cosmopolitan en bouteille à 12% d’alcool par volume. « Avec une taxe représentant 55% de notre prix de vente, cela constitue un aspect significatif en matière de tarification. Cela rend la création d’un produit premium ou de haute qualité beaucoup plus difficile, car le coût de ce que vous vendez augmente considérablement », a déclaré Lovenmark-Hay. Elle se prépare maintenant à lancer une gamme de spritz à faible teneur en alcool en conserve.

Cela rend la création d’un produit haut de gamme beaucoup plus difficile, car le coût de vente augmente considérablement.

Olivia Lovenmark-Hay, Duchess Cocktails

Lovenmark-Hay affirme que ses cocktails à 12% d’alcool étaient beaucoup plus agréables à déguster à la maison, mais en offrant quelque chose avec une teneur en alcool plus faible à 5%, nous élargissons vraiment les occasions d’utilisation et attirons un public plus large.

Un autre avantage de la production d’une série de boissons à faible pourcentage d’alcool est la réduction significative des droits d’accise fédéraux. À partir du 1er avril 2026, les spiritueux contenant au maximum 7% d’alcool par volume auront un droit d’accise de 0,358$ par litre, tandis que ceux contenant plus de 7% d’alcool par volume seront soumis à un droit de 14,117$ par litre. Duchess Cocktails sera ainsi en mesure d’offrir ses spritz à un prix plus abordable pour les clients potentiels.

La nette différence des taux de droits d’accise pour les produits en dessous et au-dessus de 7% d’alcool par volume souligne également comment ces règles arbitraires dictent les types de produits présentés aux consommateurs en magasin.

Diversification vers d’autres marchés

Nathan Flim, fondateur de The Fort Distillery en Alberta, a élargi son entreprise à plusieurs États américains et à Taïwan. Il est intéressant de noter que Flim a constaté qu’il était plus difficile d’introduire ses produits dans les magasins de vin gérés par l’État d’autres provinces canadiennes que sur le marché américain.

Pour Flim, la paperasse extensive et le processus de demande pour chaque commission de distribution de vin étaient décourageants, et la petite taille du marché dans certaines provinces rendait l’effort de postuler peu rentable. Il a réalisé plus de revenus en vendant ses produits aux États-Unis qu’en les vendant dans des provinces comme la C.-B. ou l’Ontario, où la taxation sur l’alcool est la plus élevée.

Dalia Kohen, fondatrice de Wildfolk, une marque de cocktails botaniques non alcoolisés, a également commencé à s’étendre aux États-Unis. Le processus initial s’est déroulé sans heurts, mais après le 29 août 2025, lorsque les États-Unis ont mis en place des tarifs qui ont supprimé l’exemption « de minimis » permettant aux envois d’une valeur de 800$ USD ou moins d’entrer dans le pays sans droits, Kohen a commencé à voir de nombreuses expéditions retournées. Elle a constaté que même avec la documentation appropriée, ses produits étaient souvent renvoyés, souvent endommagés et devenus invendables. Kohen a depuis concentré ses efforts sur sa croissance en C.-B. et en Alberta.

Soutenir les petits producteurs

Au Stratford-Fox Run Distillery à Ottawa, le maître distillateur Adam Brierley indique qu’en Ontario, le droit d’accise fédéral est indexé chaque année selon l’indice des prix à la consommation. Grâce à l’intervention gouvernementale, ce droit est présentement plafonné à deux pour cent par an. « Chaque 1er avril, c’est une question que les distilleries doivent considérer. Voulons-nous absorber cette augmentation dans nos coûts de production ou devons-nous augmenter chaque année de deux pour cent en fonction de l’accise? » a déclaré Brierley.

Stratford-Fox Run Distillery a généralement choisi d’absorber l’augmentation chaque année pour éviter la perception d’une hausse de prix arbitraire. « Notre whisky, par exemple, est offert à 44,95$ depuis trois ans », a précisé Brierley.

En plus du droit d’accise fédéral, il y a le taux de majoration provincial de l’Ontario qui s’élève à 61,5%. S’ajoutent également des frais environnementaux, une taxe sur le volume et une taxe de vente harmonisée de 13%. « Nous devons tous payer des taxes d’une manière ou d’une autre pour financer tous les services que nous apprécions », admet Brierley, mais il souhaite voir le gouvernement offrir davantage d’incitatifs fiscaux pour soutenir les producteurs locaux plus petits.

« Je pense que si vous demandez à n’importe quel distillateur en Ontario, nous sommes tous très envieux des avantages dont bénéficient les distillateurs en C.-B. », a-t-il ajouté.

En C.-B., les producteurs de spiritueux utilisant des ingrédients agricoles 100% de la province et maintenant un niveau de production inférieur à 100 000 litres par an peuvent se qualifier comme distillateurs artisanaux. Cette désignation leur permet d’éviter la majoration de gros standard de la BCLDB. En Ontario, il n’existe aucune exemption pour l’utilisation d’ingrédients cultivés en Ontario.

« Nous sommes imposés de la même manière que les grands producteurs, alors que le coût de la main-d’œuvre et des matières premières est nettement plus élevé en comparaison », a déclaré Brierley. Les économies d’échelle favorisent clairement les grands producteurs, donc Brierley souhaiterait voir le gouvernement ontarien mettre en œuvre un programme similaire à celui de la C.-B. pour donner une chance aux petits acteurs, comme lui, de rivaliser.

There are a host of factors pushing Canadians to drink less alcohol. Inflation and rising grocery prices have forced many to cut back on luxuries, such as alcohol, to save money. Many Canadians are also prioritizing their mental and physical health, which has led to a rise in moderation mindsets such as the sober curious movement. Consumers’ focus on health and wellness has also contributed to the rise of functional beverages, drinks with ingredients that offer added health benefits.

An Ansira report, 2026 Alcohol Trends, found that alcohol consumption fell from 67 per cent in 2022 to 54 per cent in 2025 in the United States. In 2026, alcohol consumption is expected to continue its downward trend, as low- and no-alcohol beverages continue to gain a greater share of the market.

How moderation mindsets are reshaping drinking culture

Sober curiosity is when a person tries to be more mindful of their alcohol consumption and tries to reduce or stop drinking alcohol. This lifestyle change is rooted in re-evaluating society’s drinking norms, living a healthier lifestyle and embracing NA options. Younger generations, especially Gen Z, are leading this movement, as they are choosing to simply not drink alcohol.

A 2025 report on the Sober Curious Movement by Circana stated that “65 per cent of American Gen Zers planned to drink less in 2025, and 39 per cent planned to adopt a dry lifestyle not just during January, but during all of 2025.”

For Angela Hansen, the founder and owner of Mocktails – Vancouver’s first exclusive NA bottle shop – creating an entirely alcohol-free store was a deeply personal matter. Hansen struggled with an unhealthy relationship with alcohol for many years. When she quit drinking, she wanted to find NA options that could replace the routine and experience of drinking alcohol. During this period, Hansen also noticed many people in her life slowing down their alcohol consumption and saw the trend of ‘zebra striping,’ the practice of alternating between NA and alcoholic drinks, becoming more commonplace in social settings.

Hansen was blown away by the products available, but realized that an exclusively alcohol-free store like Mocktails didn’t exist in Vancouver. “I felt there was a space that needed to be filled for people to have that exclusivity and that inclusive place for people to come and buy NA products without the pressure of alcohol,” she said.

At her store, Hansen sees firsthand the changes in consumers’ drinking habits. Her customer base is diverse and includes the sober and sober-curious, people in recovery, pregnant women, new parents, and both older and younger generations. She sees the older Gen Xers like herself who overindulged in their youth and are making lifestyle changes that include not drinking anymore. Then there are the younger generations, many of whom don’t drink to begin with.

“In my generation, we used alcohol as a medication. [Now], you aren’t ostracized anymore because you are choosing not to drink. It is becoming more common not to drink or drink less,” Hansen said.

Hansen reflects on how many of her older customers have been recommended by their doctors to stop drinking or are taking medications that interact with alcohol. However, these older generations have developed a routine of drinking after work. “That kind of hand-to-mouth ritual is important to the older generation, especially,” Hansen said, so she is proud that people can come into her store and find an NA alternative that allows them to continue their routine.

Hansen says she also finds that the growing selection and quality of NA products are making it easier for consumers to make healthier choices, and that NA alternatives often taste as good, or better, than their alcoholic counterparts. She also sees NA products as contributing to more inclusive spaces. Having struggled with an unhealthy relationship with alcohol, Hansen explains that for her, going out for a drink isn’t about looking for a buzz. Rather, she is “just looking for the ritual and the taste of it and the experience.”

When she goes to a restaurant and sees NA options beyond soda and juice on the menu, it makes her feel thought of and included.

Crafting beverages for under-served demographics

When Olivia Lovenmark-Hay, founder of Duchess Cocktails, became pregnant, she quickly realized that she could no longer enjoy the beautiful cocktails that she loved so much. “I hate to say it – it sounds naïve – but all of a sudden it opened my eyes that a good chunk of the population is going to go through pregnancy and they might like an alternative,” she said.

At the time, Lovenmark-Hay was working on creating NA equivalents of her existing cocktail lineup. When she launched her NA cocktails in fall 2023, she received many messages from pregnant women and new moms who were grateful for the NA options, as they could continue enjoying cocktails without worrying about the effects of alcohol. Lovenmark-Hay specifically designed her brand with midlife women in mind. “It is an underserved demographic, and it is an audience that prioritizes quality and experience,” she said.

At the time, Lovenmark-Hay didn’t see herself represented in the products available and was motivated to create Duchess Cocktails to meet women where they were at in life. Whether they were looking to become pregnant, already pregnant, menopausal, or simply prioritizing wellness in their lives, “all these life changes dictate what they eat and drink,” she said.

Her instincts proved correct, as a report released by Circana highlighted the increasing popularity of NA drinks among American women who are pregnant or breastfeeding. “In 2023, 25 per cent of women who gave birth within the last three years had an NA drink while pregnant or nursing. In 2024, that percentage jumped to 39…,” the report stated.

Staying competitive in hybrid drinking occasions

To better meet her customers where they are at, Lovenmark-Hay is expanding the Duchess portfolio to include spritzers and sodas. Her current line-up of cocktails is packaged in glass bottles and has a minimum ABV of 12 per cent. Duchess spritzers will have a lower alcohol content and be packaged in cans for easier transportability. The Duchess spritzer and soda are meant to provide more affordable options to complement her premium offerings.

Diversifying her product offerings into low- and no-alcohol categories is also a strategic decision, as she sees consumer behaviours shifting in that direction and wants to stay ahead of the competition. Current data backs her up, as “2024 saw another year of double-digit volume growth for low- and no-alcohol in Canada. The forecasted volume… for no-alcohol beverages between 2024 and 2028 is up seven per cent” (IWSR). Growth in this category is primarily attributed to younger demographics and moderation mindsets.

Lovenmark-Hay says she isn’t too worried about NA beverages lowering the rate of alcohol consumption. She finds that consumers are instead becoming more educated about how they drink and what drink options are available to them. For example, consumers are moving towards hybrid drinking occasions where, instead of only drinking alcoholic or NA products, they may choose to enjoy both types of products on the same night, so that they won’t have a hangover the next day.

Wellness is becoming more significant in shaping consumers’ drinking habits, so “now we are just giving them an option to drink when they don’t want alcohol,” said Lovenmark-Hay. She wants her products to remove the stigma of not drinking alcohol in social settings by giving people NA alternatives that look and feel the same as alcoholic offerings. “If there isn’t a difference between what you are choosing, I think people feel more relieved and relaxed, and I think it allows people to have a good time on their own terms, which is really important in social settings,” said Lovenmark-Hay.

Why RTDs are continuing to outperform traditional categories

Globally, the ready-to-drink (RTD) beverage market is projected to grow by 116.45 per cent over the next 10 years, increasing from $35.14 billion in 2025 to $76.06 billion in 2035, according to a report from Business Research Insights. Spirit-based RTDs are particularly dominant in this category, accounting for 79.8 per cent of the total volume, according to Wine & Spirits Wholesalers of America.

Susie Goldspink, head of RTD insights at IWSR, noted in RTDs Strategic Study 2025 that the greatest opportunities for growth lie in markets where RTDs are already established, with Canada being a prime example.

The growing popularity of RTDs is due to several factors, such as their accessibility and portability. Rather than going out to a bar or gathering the supplies and ingredients needed to make a cocktail at home, consumers can simply enjoy a cocktail in a can. RTDs are also versatile and can be served in restaurants and bars or taken away for off-premises consumption. Aside from its convenience, the RTD industry is producing exciting new flavour profiles that continue to captivate consumers.

Nick Devine, the cofounder of Edna’s Non-Alcoholic Cocktail Co., has successfully merged the popularity of RTDs with the rising demand for NA beverages. His brand of NA and RTD cocktails is now sold nationally across Canada and the U.S. While the brand began locally in Vancouver, B.C., Devine says his sales revenue from the U.S. has now surpassed his Canadian sales, thanks to a partnership with Target.

Reflecting on his business’s beginnings, Devine recalls his early efforts to persuade bars and liquor stores to stock his NA cocktails in 2021. He often received confused and incredulous looks from potential buyers, who reminded him that they were in liquor establishments. Since then, the NA space has grown significantly, with more bars and restaurants now catering to NA consumers.

“There is a proper section in their menu now. You rarely saw that five years, 10 years ago, but now, all of a sudden, it is almost commonplace,” said Devine. He believes that Gen Z’s preferences for NA beverages, amplified by social media, have made not drinking mainstream. “All of a sudden it’s cool not to drink, whereas it used to be – almost twenty years ago – you were almost outcast if you said you didn’t drink,” he said.

Devine believes consumers “are coming to the realization that you can still have fun and maintain a fun lifestyle, and social lifestyle, and do it without booze. You aren’t going to have a hangover, but it’s got the body and feel of a proper cocktail, which is kind of what people want. It’s that habit. They don’t want to sit there with a sweetened sugary soda pop. They want a proper drink.”

Challenges of entering the NA and RTD categories

For those thinking of entering the low- and no-alcohol space, a major challenge is creating a beverage that mimics the taste and body of real alcohol. Edna’s Non-Alcoholic Cocktails Co. uses shrubs, concentrated syrups that contain fruit, sugar and vinegar, to mimic the bite of alcohol. They also use specially formulated extracts to add greater complexity to the flavour of their NA cocktails.

Devine’s background as a professional bartender made it easy for him to develop NA cocktail recipes. However, he found the process of adapting bar recipes into shelf-stable canned products to be a steep learning curve and had to enlist the help of a food scientist to finalize his recipes.

Another challenge cited by both Lovenmark-Hay and Devine was the difficulty of finding co-packers for their products. Devine eventually found a suitable co-packer in the neighbouring province of Alberta. Lovenmark-Hay’s search for a co-packer was far more difficult, as her packaging was too unique for most co-packers to handle. Although it would have been far simpler to change her packaging to meet a co-packer’s requirements, she was confident that her unique packaging would help her stand out from other RTD products on the market. This led her to establish her own production facility for Duchess Cocktails, where she now provides co-packing services for other brands as well.

Despite the challenges of developing her NA cocktails, Lovenmark-Hay says she is grateful for the growth of the NA sector. She notes that it has made her brand more accessible, enhanced brand awareness and created more sales opportunities. “We have people that start with our [NA products], then move into our alcohol and vice versa, so that part has been awesome in growing our audience,” said Lovenmark-Hay.

The future of NA beverages

In 2023, the Canadian Centre on Substance Use and Addiction released a report stating that “no amount or kind of alcohol is good for your health” and consuming more than two drinks per week significantly increases the risk of developing several different types of cancer. This news caused many Canadians to seriously re-examine their drinking habits. As Canadians have decreased their alcohol consumption, they have increasingly turned towards NA alternatives. In fact, 62 per cent of consumers stated that they selected foods and beverages with health in mind, according to a report by Ansira.

As a result, the functional food and beverage market is projected to grow by 10.33 per cent to $793.6 billion by 2032. With health and wellness now a consumer priority, a new category of NA drinks has emerged: functional beverages.

Functional beverages are often designed to target a specific wellness goal, such as improving immunity, focus, digestion, or energy. Beverages such as prebiotic and probiotic sodas, vitamin-infused water and beverages with adaptogens are growing in popularity as beverage producers tap into consumers’ desire to use food as medicine. Lovenmark-Hay also thinks that as consumers become more educated, the market will move towards a preference for higher-quality ingredients, less artificial flavouring and colours and more natural products.

Many younger generations are also shifting away from alcohol to cannabis as their go-to recreational substance. This has resulted in the rise of cannabis-infused NA drinks. These beverages offer consumers a discreet and smoke-free alternative to cannabis consumption. In fact, over one in four Americans plan to try these cannabis-infused drinks, with Gen Z and Millenials being particularly interested (Circana).

As consumer preferences continue to evolve at a rapid rate, Devine, Hansen and Lovenmark-Hay all agree that there is much more innovation to come in the NA beverage space, and that they are only just scratching the surface. While trends may come and go, Devine is confident that the NA movement marks a long-term shift in drinking culture.

“This is not going anywhere. This is here to stay, and I think anyone who doesn’t realize that is really missing what is going on out there. This is a movement,” said Devine.